Dr. Andy

Reflections on medicine and biology among other things

Thursday, February 24, 2005

Costs Keep Going Up

Health care costs will continue to outpace the overall rate of inflation, and the government share of the overall bill will increase. I am not an economist or a particular expert in health care economics, but I'll venture a few thoughts:

1. That the U.S. is spending an increasing fraction of GDP on health care does not concern me. What else should we spend it on? More Ipods? We are a wealthy society and medical care seems a reasonable thing for a wealthy society to spend its money on.

2. It will be very hard to restrain healthcare costs as long as everyone thinks they are entitled to the same level of healthcare that the rich can afford. Think about it: a reasonable goal for society is that noone is without food or shelther, but no one (alright, few) would argue that everyone should have the same quality of food or shelter that the wealthiest members of society can afford. Instituting some basic cost-effective health care for everyone and making the rest available only for those who can afford it would go a long way toward reducing overall costs.

3. As long as people see medical care as a free good, costs will continue to go up. Health savings accounts (HSAs) MIGHT be able to bring down costs because consumers will actually have an incentive to seek out better prices. I still worry that the amount of information available about quality (and the difficulty of gathering such data) will be an impediment.

4. As the federal governments share of health care costs, pushing through a single-payer system, although it seems improbable currently, will get easier.


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